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Exam 19: Insurance

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Question 1

Multiple Choice

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In most states,an innocent misrepresentation by the insured would make the policy:

A) voidable by the insurer.
B) voidable by the beneficiary.
C) enforceable,since there was no intentional misconduct.
D) enforceable to a reasonable amount as determined by the court.

E) A) and B)
F) B) and D)

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Question 2

Multiple Choice

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________ insurance offers protection alone,and is the least expensive kind of life insurance.

A) Straight life
B) Universal life
C) Limited-payment life
D) Term

E) None of the above
F) All of the above

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Question 3

True/False

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Tia is severely injured in an auto accident and dies 45 days later from these injuries.Her beneficiaries may not collect under a double indemnity provision because it is beyond 30 days of the accident.

Which of the following is true of coinsurance?

Logan's building has a replacement cost of $500,000 and his fire insurance policy has an 80% coinsurance clause.Logan has $200,000 of insurance on the building which is completely destroyed by fire.Discuss how much Logan will collect from the fire insurance policy.

Lane mails a $600 check for his $50,000 home policy with Surround Insurance Co.two months late.Surround cashes the check.Two weeks later,the house is destroyed by fire.When Lane attempts to collect the $50,000 in policy proceeds,Surround asserts that the policy had lapsed and offers to refund the $600 payment.Discuss the legal rights and obligations of Lane and Surround Insurance Co.

Stanley falls into the low-income group.Which of the following health care plans can Stanley opt for?

A(n) ________ will provide temporary insurance coverage until the policy is formally accepted.

Melinda hits a hole in the road while driving down the highway.Her car's axle breaks,resulting in $2,500 of damages.Discuss if Melinda has coverage under any form of auto insurance.

Juanita's grandfather loans valuable artwork to the Art Museum on the condition that the same will go to Juanita if the museum closes.She wants to purchase property insurance on the art work because she feels that it would be a great loss if any mishap occurs.Discuss the legal implications of this situation.

What type of insurance policy requires the payment of premiums throughout the life of the insured and pays the beneficiary the face value of the policy upon the insured's death?

Universal life insurance allows the policy owner to modify the:

While Leah and Grant were lawfully married,Leah had purchased a $500,000 life insurance policy on Grant's life,naming herself as the beneficiary.Subsequently they got divorced and Grant died a year later.Grant leaves two surviving children,Tom and Cindy.Who is likely to receive the proceeds of the $500,000 life insurance policy?

A protection that insures property that cannot be covered by specific insurance because the property is constantly changing in either value or location is referred to as a(n) :

Before David's premium is received,David's house suffers $5,000 of water damage due to the fire department fighting a fire at his house.David may recover for this loss under his fire insurance policy.

During inflationary times,when bank interest rates are low,insurance policies are usually poor sources for loans at low interest rates.

Inland marine insurance covers goods that are moved by land carriers such as rail,truck,and airplane.

Malone purchased a painting by Van Gogh and took out a $1 million insurance policy on it.He later sold the painting,but continued to make payments on the policy.When the painting was destroyed by vandals,Malone tried to collect $1 million from the insurance company.Evaluate the situation.

Joe had made an agreement with Auto Insurance Co.not to use his van for commercial business purposes when he purchased auto insurance.Joe had an accident while delivering pizzas for Bigger Pizza,Inc.For which type of violation will Joe not be covered under his insurance?

Indemnification means that an insurance company can 'step into the shoes' of the insured and sue any party whom the insured could have sued.